From steel to tech to finance, Northwest companies shine

From heavy industry to high technology, Oregon's largest companies popped the cork on a good year for stock prices in 2006.

Oregon Steel Mills Inc., Mentor Graphics Corp., Rentrak Corp., Cascade Bancorp and PW Eagle Inc. led the pack, each with gains of 68 percent or more. With a few exceptions, Northwest stocks smiled on investors in all sectors.

The Oregonian 50 index rose 17.9 percent this year, compared with 13.9 percent for the broadest possible measure of the entire U.S. stock market, the Dow Jones Wilshire 5000 index. The Oregonian's list is a price-weighted index made up of the 50 largest companies by market capitalization based in Oregon and Southwest Washington.

Oregon Steel -- based in Portland but headed for Russia if its proposed sale to the Evraz Group is finalized -- gained 112 percent. Bend-based Cascade Bancorp expanded to Idaho and rose 68.6 percent. They led their industries and have been among top Northwest performers for three years straight.

Mentor Graphics is a different story. It hit the downside of a cyclical bump in 2005 that shook 32 percent off its share price, setting it up for a big comeback in 2006.

As if planned for Mentor's 25th anniversary, the stars aligned this year for the Wilsonville developer of products used in the design of computer chips and software.

"It's been quite a successful year," says Mentor's chief executive, Walden C. "Wally" Rhines.

Mentor's stock price increased gradually from $10 at the first of the year, then broke out in October when the company raised its profit projections for analysts and closed the year up 74.4 percent. Mentor expects that its earnings this year will be up 80 percent on revenues that will grow by 10 percent. Its bookings for new business are up 20 percent from 2005 levels through the third quarter.

"It's due to a combination of things," Rhines says of Mentor's good year. "We invested in new emerging technology, the design software industry has been strong and the semiconductor industry is increasingly healthy."

New technology that enhances optical resolution, developed at Mentor, has been a hit with customers who use it to increase their chip manufacturing yields.

The company has also managed to stay out of trouble during a year when reporters and regulators sniffed out and found problems with other tech companies that backdated stock options to boost executive compensation.

"We did a total audit and found no problems with options dating," Rhines says. An October study of local companies' practices by The Oregonian found potential problems with at least three other Oregon companies, but not Mentor.

Nor do Mentor executives draw the huge salaries and bonuses that have raised stockholder concerns at other companies.

"We're pretty parsimonious," says Rhines, who hasn't received a bonus for the past two years because of the company's flat revenues. This year's good results, though, should swing Mentor's merit system in his favor -- he finds about this year's bonus in January.

Mentor Graphics is the second-largest technology employer in Oregon, providing jobs for 1,141 in the state and another 3,000 at development and sales sites from Pakistan to Poland. The largest tech employer based in Oregon, Tektronix Inc., had a so-so year, with its stock price up a scant 3.4 percent.

Here's a look at some of the other companies in The Oregonian 50, by sector:

--Manufacturing: Oregon's two steel companies benefited from the continuing world appetite for steel, especially from the fast-growing developing economies.

Shares of Oregon Steel shot up further in November after Evraz Group offered to buy the Portland firm for $63.25 a share. That deal is still in the works but is likely to close in January.

Oregon's other steel company, Schnitzer Steel Industries Inc., gained 29.8 percent for the year. The longtime Portland firm began selling its scrap metal to steel mills in Europe and India in 2006, expanding its international customer base beyond Asia.

Last year's big winner, PW Eagle Inc., turned in another standout performance this year. Stock in the Eugene pipe maker gained 68.3 percent on continued strong demand for its irrigation pipe in farming and for its polyethylene pipe in industrial and commercial construction and in oil and gas development.

Precision Castparts Corp. gained 51 percent on the strength in its aerospace business. Precision Castparts makes complex metal parts for jet and gas-turbine engines, including those powering the latest Boeing and Airbus planes.

Greenbrier Cos. Inc. rebounded from a share-price drop last year to eke out a 5.6 percent gain. The company added assets with acquisitions and boosted railcar sales as railroads continued their replacement trend of recent years.

Blount Industries Inc., which makes saw chain and other products for timber harvesters, suffered from a nationwide slowdown in the housing market and saw its stock drop 15.5 percent.

-- Financials: It may have slowed in other parts of the country, but construction continued at a fast pace in the Northwest, a trend that benefited the companies that have financed the building boom. Banks based in Oregon and Southwest Washington opened their checkbooks wide for residential and commercial builders in the region, gaining an average 20 percent in their stock prices.

Cascade Bancorp's integration of Farmers and Merchants Bank of Boise "was a home run," says analyst Jim Bradshaw of the D.A. Davidson & Co. brokerage. Cascade's stock was up 20 percent by June, then flew higher after reporting a "monstrous" second quarter, Bradshaw adds.

Cascade put a dividend dollop on its stock when it gave shareholders a 5-for-4 split in November and closed the year up a total of 68.6 percent.

The building boom in Clark County continued to spark shares of Vancouver's Riverview Bancorp, "the 800-pound gorilla in Clark County," Bradshaw notes. Rumors that the bank might be bought out also teased the stock price higher, according to Bradshaw. Riverview closed the year up 30.4 percent.

West Coast Bancorp of Lake Oswego had a "very, very solid year," Bradshaw says, as senior-level executives recruited from U.S. Bank became a potent commercial lending force in the region. Shares of the bank holding company were up 31 percent.

Other banking standouts include Pacific Continental Corp. of Eugene, up 22.4 percent; Columbia Bancorp of The Dalles, up 19.8 percent; PremierWest Bancorp of Medford, up 19.7 percent; and Cowlitz Bancorp of Longview, up 16.5 percent.

Umpqua Holdings Corp. of Portland languished a bit with its acquisition of Western Sierra Bancorp of Sacramento, then bounced back late in the year, posting an annual gain of 3.2 percent.

Shares of bank software provider Corillian Corp. of Hillsboro rose 38.6 percent.

In the not-so-hot category among financials was StanCorp Financial Group, down 9.8 percent. StanCorp's insurance claims and expenses went up and its profit projections went down, all of which put a damper on its share price.

--Technology: Besides Mentor Graphics, other timbers in Oregon's high-tech forest made some nice gains this year.

Lattice Semiconductor Corp., up 50 percent, posted its first quarterly profit in five years during 2006. A new class of programmable computer chip from the Hillsboro company showed signs of gaining market acceptance, giving investors hope that Lattice's turnaround may have legs.

Digimarc Corp. of Beaverton, up 49 percent, landed more contracts with state driver's licensing and other agencies for its digital watermarking technology. Circuit board maker Merix Corp. of Forest Grove, grew its share price 28.5 percent on the rebound in the electronics industry

Shares of FLIR Systems Inc. of Wilsonville gained 42.5 percent for the year. The defense contractor and producer of thermal imaging products was among a handful of local companies whose option-granting practices came under scrutiny during the year.

Metro One Telecommunications Inc. enjoyed a surge in stock price during 2006 after a radical restructuring that eliminated thousands of call center employees across the country. The Beaverton company, which sells directory assistance service, has lost all its major customers and so slashed costs in a bid to survive.

Though Metro One substantially reduced its expenses, it continues to lose money and its auditors warned early in 2006 that the company is in danger of going out of business. Its shares closed the year at $2.58, up 79 percent.

Oregon's trio of electronic display companies -- InFocus Corp., down 33.4 percent; Pixelworks Inc., down 54.9 percent; and Planar Systems Inc., up 15.5 percent -- endured a trying year.

Wilsonville-based InFocus is evaluating "strategic alternatives," including the possibility of selling the company, after years of losing market share to Asian competitors.

Planar Systems faces the same challenges but is meeting them by adopting a new strategy to target niche markets. The Hillsboro company plans to make several lines of electronic displays that perform specialized functions for industry, medical equipment and advertising.

Pixelworks, which makes computer chips for high-end televisions, has had a tough time persuading Asian TV manufacturers to use the Tualatin company's technology. Pixelworks replaced its CEO in December and said the company plans to reinvent itself by cutting costs and improving its technology.

--Other stocks: Shares of Oregon's largest company, Nike, have been on a tear since September and closed the year at $99.03, up 14.1 percent and near their all-time high. After last year's 20 percent dip in share price, Columbia Sportswear Co. of Portland rebounded with a 16.7 percent gain.

Portland's Rentrak Corp. gained 74 percent, aided by a push to become the dominant monitor of movie downloading.

Portland General Electric, an Enron subsidiary since 1997, finally made the break from its ignoble parent company April 3, when it began distributing newly issued shares of stock to creditors.

At the same time, Oregon's largest utility debuted as a publicly traded company. (It doesn't yet appear on The Oregonian 50 because it hasn't traded for one full year.) Trading began April 10 on the New York Stock Exchange under the ticker symbol POR, and shares closed that day at $27.98, nearly where they ended the year.

TRM Corp., the Portland ATM and copier machine company, had a tough year punctuated with management turnover and sales of assets to meet bank loan deadlines. By the end of the year, the company had decided to sell its photocopier business, and the stock regained some of its loss. It closed the year down 71.3 percent.